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HSBC Discussion Materials

May 2025

Table of contents

Overall Retail Evolution Picture

Section 1

Development of “O+O” Retail Model in Asia

• Key Shifts in Asia “O+O” Retail Scope

Section 2

• China Technology Giants’ Disruptive Influence

Competitive Pressures across Asia Retail Market

Section 3

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Section 1 Overall Retail Evolution Picture

Overview of retail evolution

Traditional Brick-and Mortar

Tech-Led and Purpose Driven Retail

Rise of E-Commerce

COVID-19 Acceleration

Online Disruption : E-commerce giants like Amazon, Alibaba, and eBay redefined shopping convenience and accessibility Long-Tail Effect : Massive product variety available online changed the consumer expectation for breadth of choice Price Transparency : Consumers could compare prices instantly, putting pressure on margins

Omnichannel Strategy : Retailers began integrating online and offline channels Mobile Revolution : Smartphones became the primary shopping tool, leading to app-based commerce and mobile payments Social Commerce : Platforms like Instagram, Facebook, and WeChat became key sales and discovery channels Experience over Product : Physical stores evolved into brand experience centers

Digital Shift : Lockdowns forced rapid digital transformation; e commerce adoption surged across all demographics Contactless Economy : Growth of QR codes, self checkout, curbside pickup, and home delivery Health & Safety Focus : Retailers had to ensure safety standards in both physical and digital operations Consumer Behavior Reset : Increased demand for essentials, local sourcing, and home-based categories

AI-Powered Personalization : Use of AI to tailor promotions, recommend products, and optimize inventory Experiential Retail : Retail as a hybrid of entertainment, engagement, and shopping Subscription & DTC : Rise of subscription models and direct-to-consumer strategies Retail Media Networks : Retailers monetizing first party data via social platforms (e.g., Walmart Connect, Amazon Ads) Sustainability & ESG : Growing importance of ethical sourcing, circular economy, and sustainable practices

Store-Centric : Retail was primarily physical — department stores, supermarkets, and malls dominated Push Model : Brands controlled the narrative, and shoppers responded to mass marketing and promotions Limited Data : Retailers had little consumer insight beyond sales data Cash-Heavy Transactions : Reliance on cash and basic POS systems

Globalization : Brands began to scale globally through digital platforms

Pre-2000s

2000s – 2010s

2010s – Late 2010s

2020-2022

2022 – Now

Future… Experiments with virtual stores, AR/VR, and blockchain for transparency and loyalty…

Source: broker reports, public articles

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Key shifts of general retail market

Key shifts

Key drivers

Implications

✓

Physical stores were the primary touchpoint

Tech advancement

Brick-and-Mortar Focus → Omnichannel Ecosystems

Unified inventory, consistent pricing/promo, cross-channel loyalty are important

Seamless integration across physical, digital, and mobile channels Customers browse online, pick up in-store, return via app

✓

Smartphone penetration

✓

Logistics capability

Standard promotions, uniform store layouts, limited segmentation

✓

Data analytics

Mass Selling → Hyper Personalization

Invest in customer data platforms and personalized engagement strategies

AI/CRM-based personalization

✓

Loyalty programs

Targeted offers, custom bundles, tailored experiences, individualized product recommendations

✓

Digital ID tracking

✓

Goal was stocking shelves and selling products

Rising consumer expectations

In-store experience, staff training, and brand storytelling are now differentiators

Creating immersive, emotional, value-rich experiences Try-before-you-buy, events, beauty bars, VR try-ons, etc.

Product-Centric → Experience-Driven

✓

Intensified competition

✓

Social influence

✓

Retail was primarily a point of sale — with little post purchase engagement

Subscription economy

Transactional → Relationship Oriented

Value now lies in customer lifetime value, not one-time basket size

✓

Loyalty marketing

Lifecycle engagement

Nurturing loyalty, rewards, subscription models, memberships

✓

Data capture

Source: broker reports, public articles

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Key shifts of general retail market (cont’d)

Key shifts

Key drivers

Implications

✓

Price wars and discounting were the main levers

Gen Z values

Private label and premium ranges coexist; ethical sourcing and brand values matter more

Price-Led Competition → Value & Purpose Led

Consumers want value, not just low prices, including quality, sustainability, convenience, ethics

✓

ESG awareness

✓

Rising affluence in many markets

Global brands often rolled out universal formats/products

✓

Diverse consumer expectations

Global Trends → Local Relevance

Hyper-local strategy wins — “think globally, act locally.”

Retailers need to localize assortments, formats, payment methods, and even tone of voice

✓

Cultural nuances

✓

Local competition

✓

Rigid supply chains planned far in advance

Geopolitical disruptions

Linear Supply Chains → Agile, Responsive Networks

Agility in sourcing, forecasting, and fulfillment is a core competency

Dynamic, responsive networks that adapt to demand spikes, delays, and consumer feedback in real time

✓

Digital supply chain tech

✓

Fast logistics models

✓

Big-box and flagship stores were central to growth

Urbanization

Store-First Formats → Format Fluidity

Retail must be flexible with space, capex, and operating models

Retailers deploy a mix of formats, each serving different needs Flagship, pop-up, express, click-and-collect, unmanned stores etc.

✓

Consumer mobility

✓

Real estate shifts

Source: broker reports, public articles

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Different market under different development stage

Transitional / volatile markets

Fast-Growth / high-potential markets

Mid-stage / rapidly modernized markets

Advanced retail markets

Key regions

China US JapanSingaporeTaiwan

Key regions

✓ Mature omnichannel ecosystems

& parts of Eastern Europe, Latin America

Key regions

✓ High mobile commerce penetration

Thailand

Malaysia

Vietnam

Turkey

✓ High smartphone penetration

✓ AI personalization

✓ Macroeconomic pressures (e.g. inflation, currency)

Indonesia

Philippines

India

✓ Growing e-commerce share

✓ Advanced loyalty & data capabilities

✓ High price sensitivity

✓ O+O innovation

✓ Rising middle class

✓ Discount formats booming

✓ Strong beauty and health verticals

✓ Modern trade still expanding

✓ Digitization uneven

✓ E-commerce growing fast

✓ Cashless still emerging in parts

•

Benchmark markets for innovation, esp. social commerce, store digitization

•

Local players leapfrogging into digital transformation Great testbeds for piloting omnichannel models

•

Need to balance affordability with customer experience Agile pricing and cost-efficiency critical

•

Education, trust, and access are key Opportunity for category creation and loyalty leadership

•

Source: broker reports, public articles

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Key technological advancements in advanced markets – the US

Mobile & Omnichannel Technology

Personalization & Customer Data Platforms

Automation & Robotics

Retail Media & Digital Ad Platforms

Seamless integration of digital and physical experiences

Use of big data and AI to tailor offers, pricing, and experiences

Use of robots for shelf-scanning, warehouse fulfillment, and even delivery

Monetizing shopper data through retail media networks

►

Amazon advertising

Personalized product recommendations via gen AI

Walmart connect

“Drive Up” mobile order pickup

Target roundel

Instacart’s carrot ads

Autonomous shelf scanners and backroom bots

eBay advertising

Appointments and mobile stylist integration

Delivering in-app, in-store, and email marketing personalized to shoppers

►

Appointments, price matching, curbside pickup

Predictive analytics for coupons and product suggestions

Kiva robots in fulfillment centers

Source: broker reports, public articles

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Key technological advancements in advanced markets – China

Mobile-First Digital Ecosystem

Social + Livestream Commerce

Smart Stores & New Retail

Delivery & Fulfillment Technology

Consumers skipped desktop and moved directly to mobile shopping

Retail embedded within entertainment and influencer ecosystems

Digitized stores connected to online platforms in real-time

Ultra-fast, AI-optimized delivery

►

Meituan: 30-minute grocery delivery with autonomous delivery vehicles

Alibaba’s Hema:

Alipay/WeChat Pay

Taobao Live: Top streamers sell millions in minutes

• Face -scanning for checkout

•

Cashless society with QR-code based payments

• AI -powered product suggestions

• Real -time analytics for inventory & staffing

JD X Unmanned Stores: Entry via facial recognition; AI checkout

Mini programs within WeChat

Douyin (TikTok China): Integrated social + shop tab

Cainiao (Alibaba): Smart logistics with real-time tracking, route optimization

•

Shop, order food, pay bills — all without leaving the app

Source: broker reports, public articles

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How to localize globally successful retail tactics

Key retail tactics to capture retail shifts and trends

Phygital Experience: Enable store-to-app continuity

Smart CRM + Loyalty: Unify CRM across all touchpoints

Local KOL + Livestream

Last-Mile Speed from Stores

Hyperlocal Merchandising

QR product scan

Dynamic coupons

Launch local livestream commerce in waves

In-store warehouse in flagship stores to allow fast local delivery or pickup

Tailor assortments using AI + store-level sales

►

App-based skin analysis

Anniversary gifts

►

Pair store launches with real-time events

►

AR try-ons (esp. for H&B)

Behavior-triggered offers

►

Key future development focus

Advanced Digital Tech

Mid-Level Tech & Retail Infrastructure

Emerging and Leapfrogging

PH ID

MY TH

TUR

SG TW

AI personalization

Loyalty-based CRM

Mobile-first design

Social selling

►

Omnichannel excellence

Influencer commerce

App promotions

Payment integration

►

Automation

Delivery fulfillment

►

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Section 2 Development of Asia “O+O” Retail Model

Key Shifts in Asia “O+O” Retail Scope

Asian consumers are increasingly opting for hybrid shopping experiences that combine both online and offline channels

Generally, over than half consumers prefer an omnichannel shopping experience Preferences for omnichannel or online only shopping across Asia main markets (based on KPMG’s survey in 2024)

Online retail's contribution keeps increasing significantly over the years

Asia Pacific 1 retail market’s split evolution between offline and online Retail sales value (USDbn)

2020-24 CAGR

Overall retail

3.3%

Indonesia

87%

Offline

1.1%

Online

10.4%

Vietnam

85%

6,769

6,614

6,590

India

81%

6,464

6,128

5,953

South Korea

79%

22%

27%

26%

25%

17%

21%

Singapore

79%

Philippines

78%

Thailand

78%

76%

83%

73%

74%

75%

79%

Malaysia

73%

Taiwan

70%

2019

2020

2021

2022

2023

2024

AS Watson’s key markets

Japan

55%

Retail - Offline

Retail - Online

Overall technological achievements and consumer preferences keep driving the development of omnichannel retail model

Striking increase in internet connectivity

Value visibility via price comparisons and online reviews

Emerging technologies empowering online players

Traditional retail unlikely to fully meet expectations

Source: Euromonitor, KPMG/GS1 survey analysis, public articles Note: 1. Based on Euromonitor’s category, which excludes Australia and New Zealand

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Despite the general growth of online retail, each market shows different trends in O+O retail channels

Most markets show significantly faster growth in online retail compared to offline channel

◆ Indonesia and Thailand retail markets have the highest e-commerce penetration rate, over than 20%

◆ Indonesia, the Philippines, Thailand and Vietnam witness strong increase in online channel

◆ Singaporean consumers are experiencing relatively balanced growth in online and offline

TUR 1

Online retail’s contribution to overall retail

32.8%

23.5%

19.8%

(2019, 2020, 2024)

16.7%

15.2%

15.1%

14.9%

14.0%

12.6%

11.3%

11.2%

11.0%

10.7%

10.4%

10.1%

9.5%

9.3%

7.9%

6.9%

6.4%

6.0%

5.0%

4.9%

3.0%

2019 2020 2024

Online channel witnesses significant increase

Offline channel is showing resilience

69.2%

2020-24 Offline and Online retail sales value CAGR

58.9%

31.4%

29.6%

26.2%

24.4%

12.5%

12.1%

6.7%

6.5%

6.1%

5.8%

4.9%

3.6%

2.5%

2.2%

Offline Online

Source: Euromonitor Note: 1. Dramatic growth of Turkey’s retail sales value is due to inflation and exchange rate

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O+O preferences vary by product category, with Beauty and Personal Care being the one with the highest overall share of online spending

Taking China market as a reference, online sales of every category in every market has great room for development

Beauty and Personal Care

Consumer Health

 The proportion of online purchases for consumer health products remains relatively low

 Taiwan and Indonesia have an online penetration rate of over 20%

47%

43%

VN TUR

SG TW

% of online RSV to overall retail

27%

24%

20%

19%

17%

13%

11%

10%

9% 10%

offline online

Non-fresh Foods

Home Care Products

 SEA consumers are currently not very commonly to buying food online

 Online spending in the Philippines is significantly the lowest

15%

36%

VN TUR

SG TW

% of online RSV to overall retail

27%

10%

19%

14%

11% 13%

3% 3%

2% 1%

offline online

Source: Euromonitor market data

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Consumers have a strong foundation in online spending, with most preferring searching online for competitive prices and wide variety of products

More than half of SEA consumers have developed mature online shopping habits

% of internet users aged 16+ who buy something online each week (research of SEA countries)

Main online purchase channels of the TOP markets

Good online purchase base

Thailand TH

66.6%

12%

The SEA markets generally have a good online purchase foundation, with over 50% internet users owning online shopping habits

11%

Philippines PH

59.7%

Malaysia MY

59.6%

74%

88%

89%

Facebook Marketplace is the most used social commerce platform

Vietnam VN

59.0%

Indonesia ID

56.0%

Filipino are surprisingly purchasing via TikTok Shop the most

Worldwide SEA avg

55.2%

Facebook marketplace Instagram shopping TikTok shop

Singapore SG

54.7%

Traditional e-commerce platforms

Competitive Pricing and Wide Varity of Products are the TOP requirements among most all the markets

TOP 5 features which consumers valued most in online shopping experience

Price, choice and convenience dominated

Across all 8 markets, competitive pricing , a wide variety of products and fast and reliable delivery are generally topped the list

Taiwanese value the Security of Payment much more than other markets’ consumers

Offers competitive pricing

Ensures fast and reliable delivery

Provides a wide variety of products

Provides good customer service

Provides secure payment options

Provides promotions and discounts

Source: Meltwater’s research in 2024, KPMG/GS1 survey analysis, public articles

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Diversified O+O touchpoints are reshaping how, where, and when consumers engage with purchases

Shift from Physical to Phygital Touchpoints

E-Commerce Platforms Becoming Discovery + Engagement Hubs

Mobile Becomes the Primary Retail Interface

► Modern retailers integrate QR codes, AR/VR, mobile payments, and loyalty apps

 Evolved Role of Platforms like Lazada, Shopee, TikTok Shop:

Mobile touchpoints includes:

►

Content discovery platforms



Social engagement spaces



Livestream commerce venues



App push notifications

In-app wallet campaigns (GCash, ShopeePay)

…



Flash sale countdowns

Gamified shopping (coins, vouchers)

Livestreaming “ shoppertainment ”

SMS/WhatsApp commerce

In-app games for discounts

Indonesia, the Philippines, Vietnam, and Malaysia , over 70 – 80% of e commerce traffic is now mobile-based Shopee’s Shopee Farm or Coin Rewards gamifies daily app visits, turning casual browsing into habitual engagement

► Flagship stores act more as experience centers, while conversions often happen online

Conversation online

Purchase offline

Thailand and Vietnam, TikTok Shop has made video content the first point of product discovery

Source: company information, public articles, broker reports

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Diversified O+O touchpoints are reshaping how, where, and when consumers engage with purchases (cont’d)

Creator & Influencer as Retail Touchpoints

Messaging Apps as Retail Frontlines

Payment & Post-Purchase as Critical Touchpoints

Whole touchpoint lifecycle is look like..

► Digital wallets is growing to extend the retail experience with diversified functions and corporations…

►

Thailand, Taiwan

Discovery starts on TikTok,

Vietnam

YouTube Shorts, or Instagram

Consumers seek influencers for

Diversified post-purchase touchpoints

►

reviews or buy directly from their

Commonly used around Asia

livestreams or affiliate links

Cashback offers

Brand trust increasingly

depends on creator endorsement

BNPL (Buy Now Pay Later)

Flash sale alerts

Personalized customer support

KOLs and micro- influencers are…

►

Order placements and confirmations

In-app store discovery

In Thailand , LINE Official Accounts are critical for local businesses to run loyalty campaigns and drive repeat purchases

Product educators

Trust-builders

Fulfillment tracking apps

Direct sales channels

Source: company information, public articles, broker reports

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Rising inflation and geopolitical tensions have led to a shift to value-seeking behaviors

Across Asia, more shoppers report heightened price awareness compared to 2019

Percentage of consumer of Price Awareness

Vietnam (60%) and Thailand (72%) see over half shoppers acutely aware of price changes Philippines’ consumers are resilient with almost unchanged price awareness

◆

-5% pts

+9% pts

+18% pts

◆

63.0% 72.0%

60.0%

47.0% 47.0%

42.0%

41.0% 36.0%

2019

2024

2019

2024

2019

2024

2019

2024

Percentage of consumer of Price Perception

Over 80% of shoppers in Korea, Singapore, and Taiwan perceiving price increases

◆

86.0%

82.0% 89.0%

70.0%

45.0% 50.0%

2019

2024

2019

2024

2019

2024

2019

2024

Shoppers are making deliberate choices to maximize their budgets, more concerned about…

“which retail channels to shop at”

“how often to shop”

“ trade - off of basket sizes”

“willingness to change stores and brands for promotions”

Source: NIelsenIQ Consumer Outlook 2024, NielsenIQ Shopper Trends 2024, broker reports

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China Technology Giants’ Disruptive Influence

China technology giants’ expansion into ex -China Asian market is bringing profound and disruptive impacts on overall O+O retail ecosystem

Revolutionized logistics and B2C e commerce platforms, creating scalable infrastructure and internationalizing Chinese retail models

Reshaped consumer fintech ecosystems (esp. payment), supporting commerce through platforms like Shopee and GCash

ByteDance redefined retail through entertainment, content, and creator-led commerce

Acquired a controlling stake in Lazada in 2016, currently serving as Alibaba’s flagship e -commerce vehicle in Southeast Asia Acquired a majority stake in Trendyol in 2018, now one of Turkey’s largest e-commerce platforms and is expanding into logistics and express delivery

Invested in the operator of GCash , the Philippines’ leading digital wallet Through LinkAja and GoPay, Tencent has stakes in Indonesia’s payment networks Tencent Cloud owns data centers and operations in Singapore, Thailand, Indonesia, and Malaysia Tencent-Backed VNG Corporation is a major force in Vietnam’s digital economy

Launched TikTok Shop in Indonesia, Vietnam, Thailand, Malaysia, Philippines, rapidly becoming a leading “ shoppertainment ” player, mixing short videos, livestreams, and in-app transactions Investing heavily in TikTok for Business, offering ad tools, influencer partnerships, and small business support TikTok Creator Marketplace links brands with local influencers

►

Alipay links with SEA local digital wallets

►

Cainiao has invested in SEA smart warehouses to improve last-mile efficiency Alibaba Cloud is a fast-growing business unit across many Asian countries

►

Asian consumer behavior is more impulsive, mobile-first, social-driven, and tech-integrated; Local players have to evolve rapidly

Source: company information, public news

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Disruptive changes: Reshaping consumer behaviors and preference

Rise of Mobile First, App-Centric Commerce

Faster Fulfillment Expectations

Shift to Digital Wallets

Alibaba (via Lazada ), ByteDance (via TikTok Shop ), and Tencent (via investments like Shopee ) pushed commerce deeply into mobile ecosystems

TikTok Shop and LazLive (Lazada) popularized live selling, where influencers or merchants sell in real time via livestreams

Cainiao (Alibaba) and Shopee Xpress (Tencent backed) accelerated the development of same-day or next-day delivery across Southeast Asia Consumers expect fast, traceable logistics , pressuring legacy postal and local delivery services to upgrade or partner with Chinese tech systems

Alipay+ enable consumers to pay like a local, using their preferred digital wallets and banking apps with millions of businesses

►

Content and commerce mixed, encouraging impulse buys and “ entertainment-led shopping ”

►

Consumers increasingly browse, compare, and purchase within mobile apps , especially during flash sales or live shopping events

►

Trust in peer creators and KOLs now competes with traditional brand marketing

►

In Indonesia, Thailand, and the Philippines , e-commerce is now social, gamified, and real-time, with Gen Z driving this trend

►

Esp. in the Philippines, Indonesia, and Vietnam , this has accelerated the decline of cash-on-delivery and increased adoption of mobile financial services , including buy-now-pay-later (BNPL)

►

Cainiao x Lazada

Source: company information, public articles

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Disruptive changes: Long-term structural shifts in retail ecosystem

Data-Driven Personalization

Supply Chain Localization & Digitalization

Alibaba’s Cainiao logistics investments have helped professionalize fragmented logistics networks in Malaysia, Indonesia, and the Philippines

TikTok Shop and LazLive democratize retail; Housewives , students , and even farmers can become sellers or influencers

Generalizing AI recommendation engines to personalize what consumers see:

►

TikTok’s feed is a personalized shopping funnel

✓

Redefining what a “retailer” is, shifting economic participation away from large brands toward individuals

►

Lazada’s home page adapts based on browsing behavior

✓

Requests retailers to build data strategies to better compete

►

Cainiao’s network in Asia

Retailers are expected to realize the access to real-time tracking , AI-based warehousing , and optimized fulfillment

►

TikTok’s individual seller onboarding guidance

TikTok’s Retail Path in an infinite loop with big data

Source: company information, public articles

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Section 3 Competitive Pressures across Asia Retail Market

General competitive pressures across Asia retail market

Technological innovations, changing consumer preferences, and the demand for seamless shopping experiences are challenging retailers across Asia

Bridging digital and physical retail The integration of artificial intelligence (AI), machine learning, and the Internet of Things (IoT) has enhanced customer’s omnichannel experiences

Diverse consumer needs Rise of health consciousness has led to an increased demand for convenience, health, and sustainability

Economic volatility and price sensitivity Economic fluctuations, including inflation and currency depreciation, have heightened price sensitivity, leading to retailers’ pressure to offer competitive pricing and value -added products and services

Regulatory challenges and trade policies Changes and uncertainties in trade policies and regulatory frameworks pose challenges for retailers operating across multiple markets

Logistics and supply chain challenges Efficient logistics are crucial for timely delivery and customer satisfaction; Last-Mile Delivery is emerging and highlighting the importance of robust logistics capability

Source: broker reports, public articles

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Specific market insights: Malaysia

Key competitive pressure

Potential response strategy

Price Sensitivity and Value-Seeking Behavior Malaysian consumers remain highly price-sensitive, especially in the mass market segment

Promotions and loyalty programs to attract and retain customers

Competition from lower-priced players such as Econsave and discount stores like Mr. DIY

►

25%

36%

18%

23%

2019

2024

E-commerce and Omnichannel Competition

Keep adopting omnichannel model mobile app + website + physical stores’ “Click & Collect” + express delivery

The rapid growth of e-commerce platforms is reshaping the retail landscape

Shopee and Lazada have gained significant market share, challenging traditional brick-and-mortar retailers

Retail E-Commerce 16.5% 2019-24 CAGR

Retail offline 2.0% 2019-24 CAGR

►

5.6%

1.0%

2019

2024

Technological Innovation and Personalization

Implementing rewards systems and AI-driven customer engagement through apps and social media marketing

Advancements in technology are raising consumer expectations for personalized shopping experiences

► Major retailers are investing in AI-driven product recommendations and mobile loyalty apps to enhance customer engagement

Mall Saturation and Retail Format Shifts

Experiential retail, such as in-store

Malaysia has a high retail space per capita, leading to intense competition among malls

skincare consultations, and setting up pop-up stores in high-traffic areas

► Urban malls like Mid Valley and Pavilion compete fiercely for tenants and foot traffic

Source: broker reports, public articles

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Specific market insights: Thailand

Key competitive pressure

Potential response strategy

Price Sensitivity and Competition from Low-Cost Imports

Differentiating through quality, local sourcing, and value-added services

Thai consumers are highly price-sensitive, and the influx of low-cost imports intensifies competition

“The intensity of trade competition is creating an uneven playing field. Uncontrolled, low-cost imports are flooding the market” Nath Vongphanich , president of the Thai Retailers Association

Local retailers face challenges competing with cheaper imported goods, affecting market share and profitability

►

E-commerce Expansion and Digital Transformation

Keep adopting omnichannel model, integrating online and offline experiences

The rapid growth of e-commerce is reshaping consumer shopping habits

Shopee and Lazada dominate the online retail space, offering aggressive promotions and a wide product range

►

Retail E-Commerce 36.8% 2019-24 CAGR

Retail offline 0.03% 2019-24 CAGR

CR2 = 43.3%

Tourism-Driven Retail Growth

Tailoring offerings to tourist preferences and invest in multilingual staff and tax refund services

Thailand’s status as a major tourist destination influences retail dynamics

Number of international tourist arrivals in Thailand (million)

Retailers in tourist hotspots like Bangkok and Phuket benefit from high tourist footfall, boosting sales in fashion, electronics, and cosmetics

►

39.8

35.6

28.2

6.7

0.4

11.1

2019

2020

2021

2022

2023

2024

Source: broker reports, public articles, public news, Euromonitor

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Specific market insights: the Philippines

Key competitive pressure

Potential response strategy

E-commerce Expansion and Digital Disruption

Keep adopting omnichannel model, integrating online and offline experiences

Advancements in technology are raising consumer expectations for personalized and seamless shopping experiences

Shopee and Lazada dominate the online retail space, offering aggressive promotions and a wide product range

►

Retail E-Commerce 35.6% 2019-24 CAGR

Retail offline 3.0% 2019-24 CAGR

CR2 = 34.2%

Price Sensitivity and Discount Retailing

Promotions and loyalty programs to attract and retain customers

Filipino consumers are highly price-sensitive; Discount stores are thriving

► Hard Discount Store chains like Dali Everyday Grocery have

expanded rapidly, operating over 630 stores in the Philippines by 2024, targeting price-sensitive consumers with low-cost offerings

► The rise of discount retailers poses challenges to traditional sari-sari stores and supermarket chains

Opened first store in Feb 2020 Currently operating 630+ stores

Operational Challenges and Supply Chain Disruptions

Adopting advanced digital supply chain operations

Operational Challenges and Supply Chain Disruptions

Geographic complexity and fragmented logistics, complicates logistics operations

High Logistics Costs and Operational Inefficiencies

►

Source: broker reports, public articles, public news, Euromonitor

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Specific market insights: Taiwan

Key competitive pressure

Potential response strategy

Digital Transformation and E-commerce Expansion

Keep adopting omnichannel model, integrating online and offline experiences

The rapid growth of e-commerce is reshaping consumer shopping habits, compelling traditional retailers to adapt

Momo.com, Taiwan’s leading B2C e commerce platform, recently opened new logistics centers

Major players like Shopee, PChome,

►

Retail E-Commerce 14.4% 2019-24 CAGR

Retail offline 3.2% 2019-24 CAGR

Momo, and Ruten are intensifying competition

Price Sensitivity and Value-Seeking Behavior

Promotions and loyalty programs to attract and retain customers

Taiwanese consumers are increasingly value-conscious, seeking quality and affordability

The popularity of discount retailers and online platforms offering competitive pricing reflects this consumer behavior

Platforms like Shopee and Lazada dominate the online retail space, offering aggressive promotions and a wide product range

►

Intense Competition from Convenience Retail

Expanding presence with modern and quick formats and enhancing product offerings

Operational Challenges and Supply Chain Disruptions

► Taiwan is one of the highest densities of convenience stores globally, with over 10,000 outlets serving a population of 23 million

OK Mart has introduced “ OKmini ” stores, leveraging IoT technology and smart vending machines

► Taiwanese are increasingly accustomed to shopping at convenience stores

Source: broker reports, public articles, public news, Euromonitor

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Disclaimer

The Investment Banking division of The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) has prepared this document (the “Document”) for information purposes only. This Document does not constitute a commitment to underwrite or purchase or subscribe for all or any portion of the securities mentioned herein. Any such commitment shall be evidenced only by a fully executed subscription agreement, purchase agreement or similar contractual document. This Document should also not be construed as an offer for sale of or subscription for any investment, nor is it calculated to invite/solicit any offer to purchase or subscribe for any investment. HSBC has based this Document on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability for the contents of this Document and/or as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Document. HSBC and its affiliates and/or its or their respective officers, directors and employees may have positions in any securities mentioned in this Document (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). HSBC and/or any of its affiliates may act as market maker or have assumed an underwriting commitment in the securities of any companies discussed in this Document (or in related investments), may sell them to or buy them from clients on a principal or discretionary basis and may also perform or seek to perform banking or underwriting services for or relating to those companies. As HSBC is part of a large global financial services organization, it or one or more of its affiliates may have certain other relationships with the parties relevant to the proposed activities as set out in this Document, and these proposed activities may give rise to a conflict of interest, which the addressee hereby acknowledges. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. This Document, which is not for public circulation, must not be copied, transferred or the content disclosed to any third party and is not intended for use by any person other than the addressee or the addressee's professional advisers for the purposes of advising the addressee hereon.

The Hongkong and Shanghai Banking Corporation Limited

The Hong Kong SAR

HSBC Main Building, 1 Queen’s Road Central

© Copyright. HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank plc.

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